City of San Juan Capistrano Agenda Report

TO: FROM: DATE: City of San Juan Capistrano Agenda Report Karen P. Brust, City Manager Jl\ti!AA J1 { {](L /! Charlie View, Development Service Diref~0' 8/5/2014 E3 SUBJECT: Consideration of a Mitigated Negative Declaration (MND), Historic Town Center Master (HTC) Plan Amendment, Tentative Tract Map (TIM) 17626, Conditional Use Permit 13-08, Architectural Control (AC) 13-23, Grading Plan Modification (GPM) 13-03, Tree Removal Plan, HTC Form Based Code Administrative Modifications, Urban Village (San Juan Hotel & Villas); A Proposed Mixed Use Project Including Commercial-Retail Uses, Hotel Use, and Residential Uses on a 3.17 Acre Parcel Located at 31882, 31878, and 31872 Camino Capistrano (Assessor Parcel Numbers: 124-160-37, 51, and 52)(Urban Village) RECOMMENDATION: Open the public hearing, receive public testimony, close the public hearing, and by motion, adopt a Resolution: 1. Adopting a Mitigated Negative Declaration (MND) for the proposed project; and, 2. Approving an amendment to the Historic Town Center (HTC) Master Plan's height/setback provisions for the Esslinger Building & Judge Egan House, subject to design modifications to the proposed hotel that reduce the building mass and visual impacts to the Judge Egan House; and, 3. Approving the Tentative Tract Map (TIM), Architectural Control (AC), Conditional Use Permit (CUP), Grading Plan Modification (GPM), and Tree Removal Plan, subject to conditions of approval; and, 4. Approving the request for the administrative modifications to the HTC Form Based Code to allow a third-story mezzanine for certain residential structures and to allow for a reduced rear yard setback for the single family residential townhomes; and, 5. Denying the request for the administrative modification to the HTC Form Based Code that, if approved, would have reduced the hotel parking standard from 1.0 to 0.8 spaces per guest room.

Pa e 2 of 17 EXECUTIVE SUMMARY: In April 2012, the City Council adopted the Historic Town Center (HTC) Master Plan to guide future development in the Historic Town Center. The Master Plan establishes a vision for preserving the core character of San Juan Capistrano's downtown while acknowledging the value of allowing for new uses in the downtown area and incorporation of dynamic new buildings and public spaces. Urban Village (San Juan Hotel & Villas) (the "Applicant") has submitted applications requesting approval of a mixed-use project including commercial, hotel and residential uses situated on a 3.17 acre site in the "heart" of the Historic Town Center (the "Project"). The Project under consideration for the June 19, 2014, public hearing proposed about 2,700 square feet of commercial-retail building area, a 136-room, threestory hotel, and 33 single-family, residential structures. The proposed hotel also includes a fitness center, lounge, restaurant, swimming pool and spa, and a subterranean, two.level parking garage with 142 parking spaces. Subsequent to the June 19, 2014, continuance of the public hearing for the project, the applicant has modified the project in several ways. Modifications include a reduction in the total number of residential units (Villas) from thirty three (33) to thirty (30), addition of a ten (1 0) foot on-site buffer zone along Historic Town Center Park, increase in both the minimum and average rear yard setback for the Villas, replacement of the sidewalk along the north side of Forster Street with a landscape element, additional parking and turnaround spaces in the parking garage (See Enclosure: Large-scale project plans.) While the Applicant has submitted their plans in a manner they believe is consistent with the spirit of the HTC Master Plan, the Project does require relief from specific aspects of the HTC Master Plan and supporting HTC Form Based Code. The Project includes the following applications: 1. An Amendment to the Historic Town Center Master Plan's "Cultural Preservation Alternative" height/setback standards for new buildings adjoining the Egan House to allow a reduced (average) building setback for the proposed hotel whereas the HTC Master Plan currently requires new buildings to be setback a distance equal to the height of proposed buildings. If approved, this Amendment would reduce the proposed hotel's required setback from the north side of the Judge Egan House from 42 feet to 26 feet and allow the hotel height to exceed the height of the Judge Egan House. 2. A Tentative Tract Map (TTM) to allow the Project to be parceled into thirty-one (31) fee-simple, developable lots. 3. A Conditional Use Permit (CUP) to allow part of the site to be used for hotel purposes.

Pa e3of17 4. An Architectural Control (AC) for the site planning and architectural design of the proposed Project. 5. A Grading Modification Plan to allow on-site grade to be altered by more than two feet. 6. Tree Removal Plan to allow the removal of existing trees with a diameter of six inches or greater. 7. Administrative Modifications to the HTC Form Based Code's "TC" (Town Center) Zone District standards as follows: a. Table 2A of the HTC Form Based Code limits residential structures to a maximum height of two-stories and 35'-0" whereas the Project proposes residential structures with a third-story mezzanine (but with a maximum height less than 35'-0"). b. Table 2A of the HTC Form Based Code requires a minimum 10'-0" rear yard setback whereas the Project proposes a variable rear yard setback with a minimum of 6'-0" and average of 11 '-6" for residential structures adjoining the Project's perimeter. c. Table 2B of the HTC Form Based Code requires a minimum of 1.0 parking space per hotel guest room whereasthe Project proposes 0.8 guest spaces per guest room. At its May 27, 2014, meeting, the Planning Commission recommended the City Council: 1. Adopt the Mitigated Negative Declaration (MND), subject to the Mitigation Monitoring Program (MMP) which is attached to the proposed City Council Resolution as Exhibit "A"; 2. Approve the requested Amendment to the HTC Master Plan's "Cultural Preservation Alternative" standards for new buildings adjoining the Egan House to allow an average building setback for the proposed hotel; 3. Approve the Tentative Tract Map (TTM 17626), subject to the Conditions of Approval which are attached to the proposed City Council Resolution as Exhibit "B"; 4. Approve the Conditional Use Permit (CUP 13-08), the Architectural Control (AC 13-23), the Grading Plan Modification (GPM 13-03), the Tree Removal Plan, and the requested HTC Form Based Code Administrative Modifications to the "TC" (Town Center) Zone District's Standards to allow third story mezzanines for the

Pa e 4 of 17 residential structures on the site and to allow for a reduced rear yard setback for the residential structures adjoining the Historic Town Center Park boundary, subject to the Conditions of Approval which are attached to the proposed City Council Resolution as Exhibit "C"; and 5. Deny the requested HTC Form Based Code Administrative Modification to the "TC" (Town Center) Zone District's Standards to reduce the hotel parking standards from 1.0 to 0.8 parking spaces per guest room. DISCUSSION/ANALYSIS: The April 22, 2014, (Attachment 2) and May 27, 2014, (Attachment 3) Planning Commission Agenda Reports provide extensive analysis of the Project and the applicable regulations and policies. The. following report summarizes this information and focuses on the outstanding policy questions regarding the Urban Village Project The City Council adopted the HTC Master Plan to guide future development in the Historic Town Center. The Master Plan consists of three major components including the Vision Plan, Public Realm and Infrastructure, and the Mobility Plan and Strategy. Land Use The HTC Vision Plan for the Project site calls for the future extension of Forster Street to Del Obispo Street along with the development of offices, courtyard housing, row houses, and live-work lofts. By comparison, the proposed project includes the development of retail, hotel, and residential uses. In a separate action, the City Council is considering the establishment of the Historic Town Center (HTC) General Plan Land Use Designations of HTC Town Center and Town Center Edge including development capacities. The Planning Commission has recommended approval of a maximum Floor Area Ratio (FAR) of 1.5 as the nonresidential intensity standard for the HTC Town Center area and a residential density standard of thirty (30) dwelling units per acre. The Urban Village project as proposed is below the proposed standards, the hotel FAR is approximately 1.2 and the residential density is nineteen (19) dwelling units per acre. 1. Hotel Use The Master Plan envisioned two future hotels in the Historic Town Center - the Plaza Banderas Hotel located along Ortega Highway (SR 74) and a future potential hotel located on the Capistrano Plaza site at the northwest corner of Camino Capistrano and Verdugo Street Based on the currently proposed "Shops at Capistrano" project, the approved Plaza Banderas Hotel is no longer under consideration for the Ortega Highway site. The Capistrano Plaza site has undetermined future potential at this time.

Pa e5of17 While the site of this Project was not considered for hotel use at the time the HTC Master Plan was adopted, the proposed Project may constitute the best prospect, in the foreseeable future, for the development of a hotel in the Historic Town Center. The proposed hotel use would provide a vitally important economic boost for the downtown area and generate significant revenues capable of funding priority projects and programs for the community. This could include a general use parking structure serving the downtown area. This opportunity to establish a vital, vibrant and economically beneficial use in the Historic Town Center has been acknowledged as the primary benefit to the community of the proposed Project. In recognition of this integrated project and the importance of this benefit to the community and as a basis for considering the requested Project approvals, the Applicant and the City have agreed to record a covenant intended to ensure the hotel component of the Project is delivered with or before the residential units, The covenant has been developed as an instrument to ensure the community will receive the economic and social benefits of the proposed, full service, high end hotel. In developing this covenant, there has been extensive discussion of the level of assurance the Applicant can provide the City Council and community regarding delivery of the hotel as envisioned (See Attachment 4). The covenant establishes that with the exception of one permit for a model home, prior to the release of permits for the construction of the Villas the applicant team will have initiated the construction of a hotel defined in the document as a full service hotel with not less than 133 rooms and not more than 136 rooms constructed and operated as a full service Upper Scale Hotel Brand. "Upper Scale Hotel Brand" means a Hotel constructed and operated as a Hilton, Kimpton Hotel, Marriott Autograph Collection, Le Meridien, or Hyatt Andaz. The covenant establishes that fulfilling the requirements to construct the Villas will include entering into a management or franchise agreement, as applicable, for the construction and operation of the Hotel, providing Evidence of Construction Financing, that all building permits for the construction of the Hotel have been issued, and that the Construction of the Hotel has commenced. 2. Residential Use The Form Based Code identifies the following types of residential uses for the Town Center area: Flat: A single-story unit. Loft: A double story height unit with a mezzanine. Townhouse: A two to three-story unit. It is important to note that, while the definition section of the HTC Form Based Code accurately defines "townhomes" as two to three story structures, this does not override the clear language in the HTC Master Plan and HTC Form Based Code limiting

Pa e 6 of 17 structures in the Town Center to two stories (with an exception for hotels). The Applicant's request for relief from the two story height requirement to allow for third story mezzanines is discussed later in this report. The HTC Master Plan vision for residential uses includes townhouse developments as one of the possible product types. The Urban Village project has been revised to reduce the number of residential units from thirty three (33) homes (Villas) down to thirty (30) single family detached homes in a townhouse configuration. The Villas range in size from approximately eighteen hundred (1,800) square feet up to approximately three thousand nine hundred (3,800) square feet and with a variety of units proposed between one thousand eight hundred (1,800) square feet and two thousand three hundred (2,300) square feet. The Villas incorporate three bedrooms, lofts, decks and media rooms in the larger units providing for a variety of life style options. Each home includes a two car garage with the exception of the single "plan 7" unit that includes a three car garage. The size and configuration of the residential units contemplated for the HTC Master Plan was generally envisioned at a smaller scale with a goal of accommodating young emerging professionals, community members downsizing after raising families, and other members of the community who would enjoy the experience of living in a vibrant, active downtown. The applicant has indicated the size and configuration of the Villas ranging from an eighteen hundred (1,800) square foot home to the large three thousand nine hundred (3,900) square foot home will provide for the housing opportunities envisioned in the HTC Master Plan and expand on the concept to welcome even more members to the community. At the Planning Commission meeting of July 14, 2014 considering the Form Based Code Amendment for the allowance of single family residences in the Town Center area, there was considerable discussion of the vision of the HTC Master Plan for residential uses and the allowance for a single family detached product. The Planning Commission expressed concerns with the ability in a short time frame to thoroughly analyze and develop appropriate standards to preclude larger lot or unit sizes that could be incompatible with the HTC Master Plan vision. Given this concern, they did not recommend the modification to the Form Based Code to allow single family, detached residences. Public Realm & Infrastructure Plan. An important component of the Master Plan was the balanced provision of landscaped spaces, plazas, and pedestrian-oriented features to compliment the more intensive building massing envisioned in the Historic Town Center by the Master Plan. The proposed project includes public plaza elements for the hotel and the use of historical theme elements to create an inviting pedestrian experience along the public sidewalk adjacent to the hotel frontage along Forster Street. In response to additional community input after the Planning Commission review of the project, the plans for the residential component have been modified to create additional landscaping by replacing the sidewalk along the residential frontage of Forster Street with a landscaped edge

Pa e7of17 including additional trees and other elements, providing additional relief to the street edge. The development of the alternative street cross-section for Forster Street with a single-sided sidewalk, plantings etc. create a more inviting pedestrian experience. In recognition of the importance of balancing the interest of safe and efficient pedestrian and vehicle movement along with a viable walking experience, the Public Works Department is recommending the applicant modify the north side Forster Street landscape area to five feet allowing for a twenty three foot street section - accommodating two (2) 11' 6" travel lanes, this will also allow for the continued inclusion of a five (5) foot wide sidewalk along the southern edge of Forster Street. Other improvements associated with the residential component are the proposed pedestrian path connecting Forster Street to Historic Town Center Park, and proposed landscape and walkway improvements along the south edge of Historic Town Center Park. Given the proposed public realm improvements associated with the hotel, this component of the project is consistent with the Master Plan. With the modifications proposed for the residential component along Forster Street and the park edge, there are elements that now better address the vision of the Master Plan. However, the two private streets and the motor courts facing Forster Street faced with garage doors do not create an inviting pedestrian experience. The applicant has designed the project to invite pedestrian access off the park adjacent walkway and other pedestrian pathways and believes the motor courts with enhanced paving treatment provides aesthetic relief along Forster Street. Architectural Design Guidelines. The proposed Project has also been reviewed for compliance with the City's Architectural Design Guidelines. Significant objectives of the guidelines include consideration of the downtown "village-like" atmosphere, complementing the existing scale and character of the area, providing for diverse and creative architectural design solutions and maintaining hillside views when feasible. As a result of staff and Planning Commission Ad-hoc Subcommittee review, the Applicant's architect has made the following notable design revisions to the proposed Project: providing additional architectural detailing and articulation on exterior building elevations of the hotel (especially the hotel south elevation facing Plaza Mercado); providing a consistent architectural design for residential building blocks (five are proposed); removing the small bell tower elements from the residences;

Pa e 8 of 17 providing enhanced setbacks and landscaping along the Forster Street extension; removing the proposed hotel's tower element and extending the rooftop deck to the southwest corner to reduce the overall building mass; and, redesigning the proposed hotel's Camino Capistrano frontage to remove the proposed colonnade feature and replace that with a post-and-beam trellis structure. While these revisions to the architectural and site design provide substantial compliance with the City's Architectural Design Guidelines for the Historic Town Center, to assure the authenticity of the Project and compliance with more detailed provisions related to finish, hardware, doors, windows and similar elements, more detailed review would be appropriate. The Planning Commission motion recommending approval of certain aspects of the Project (specifically, the CUP, AC, GPM, Tree Removal Plan and Administrative Modifications to the HTC Form Based Code) included a condition requiring that final design plans and details, including the color and materials boar be subject to review and recommendation by an appointed Ad-hoc Subcommittee of the Planning Commission and final review and approval of the Planning Commission. The Ad-hoc Subcommittee and Planning Commission would also review the proposed public improvements to ensure they also support the Town Center design vision. Protection of Historically-Significant Buildings. When the City Council adopted the HTC Master Plan in 2012, their action included the adoption of the Program Environmental Impact Report's "Cultural Resources Preservation Alternative." As a result, the Master Plan was amended to establish the following standard to provide an additional level of protection to the Esslinger Building and the Judge Egan House: "Esslinger Building & Judge Egan House: These two properties would be substantially preserved in their existing condition and adaptive re-use of these existing structures would be maintained or could occur consistent with the Secretary of the Interior's Standards for the Treatment of Historic Properties with Guidelines for Rehabilitating Historic Buildings. New buildings on directlv adjoining lots must provide a minimum setback equal to the height of the new structure and such new buildings could not exceed the height of the historic structure." (Underlining added.) While the proposed hotel meets this standard with respect to the Esslinger Building, it does not meet the current setback standard with respect to the Judge Egan House. Specifically, the portion of the hotel adjoining the Judge Egan House has a height of 42'- 0" and is setback approximately 26'-0" from the Judge Egan House. To meet the HTC Master Plan standard, the height of the hotel adjoining the Judge Egan House would need to be reduced to a maximum 26'-0" or the hotel building setback increased an

Pa e 9 of 17 additional 16'-0." As discussed below, the Applicant has requested an Amendment to the HTC Master Plan to grant relief from these setback and height requirements. Amendment to HTC Master Plan. The Applicant has proposed an amendment to the HTC Master Plan to allow the minimum setback to be determined using an average setback method whereby the depth of the side yard and rear yard could vary less than the height of the proposed building, as long as the average setback was equal to or greater than the proposed building height. The proposed amendment (which is set forth below) would effectively reduce the required building setback adjoining the north side of the Judge Egan House. The Applicant's proposed amendment would accommodate the proposed hotel's setback and building height: "Esslinger Building & Judge Egan House: New buildings on directly adjoining lots must provide a minimum setback equal to the height of the new structure and such new buildings cannot exceed the height of the Esslinger Building or Egan House. However, for a proposed hotel mixed-use building which borders two or more sides of either historic structure, the minimum required setback from the adjoining historic structure will be calculated using an average setback methodology. The average setback methodology averages the sum of the minimum setback distance for each side of the historic building which adjoins a hotel mixed-use project (e.g. where a proposed hotel with a height of 45'-0" adjoins two sides of the historic structure, the hotel would be required to provide a minimum average setback of 45'-0" which could be met by (1) providing a 30'-0" setback on one side and a 60'-0" setback on the other side; or any combination of setbacks where the average minimum setback equaled or exceeded 45'-0'). Furthermore, the maximum allowable height for a hotel mixed-use project will be determined by the Historic Town Center Form Based Code." The proposed hotel's three-story building meets the intent of the HTC Form Based Code which makes a specific and exclusive allowance for hotels, and reflects the overall vision of the HTC Master Plan for developing a more concentrated and economically vital downtown core. The Form Based Code establishes a maximum height of thirty five (35) feet and two stories for buildings with a specific exception to allow a third story for hotels. Using the maximum allowed story height from the Form Based Code would accommodate the proposed hotel height. The City's Title 9, Land Use Code and HTC Form Based Code allow hotels (but not other structures) tobe developed to a maximum height of three stories, acknowledging the economic requirements of hotels. Based on the City's recent experience with the Marriott Hotel and the Plaza Banderas Hotel, both approved at three-stories, a two-story/thirty five foot height limit would not be sufficient to accommodate hotel development in the Historic Town Center.

Pa e 10 of 17 In recognition of the significant challenge of accommodating a viable building envelope for the hotel in close proximity to the Egan House, as well as the long lasting influence the proposed Project will have on the entire Town Center, the City Council directed the Planning Commission to establish an Ad-hoc Design Review Committee to work with the Applicant on the Project scale, massing and design elements. The Ad-hoc Committee and the Applicant's team worked through several plan options to develop a revised transition from the hotel to the Egan House. To reduce the visual impact of the proposed hotel's three-story building mass on the Judge Egan House, the Applicant has redesigned the hotel, especially along the Camino Capistrano frontage, to include the following changes: Removed the proposed hotel's tower element and extend the rooftop deck to the southwest corner to reduce the overall building mass. Redesigned the proposed hotel's Camino Capistrano frontage to remove the proposed colonnade feature and replace that with a post-and-beam trellis structure which would provide shading and architectural interest while opening up views of the Egan House looking south along Camino Capistrano. Revised the color palette of the hotel to incorporate darker earth tone colors and shades that reduce the high degree of visual contrast between the proposed hotel and the Judge Egan House. With these proposed design changes to the hotel, staff and the Planning Commission support the requested amendment to the HTC Master Plan to allow an average setback method for calculating the building setback. Land Use Code Entitlements. The attached City Council Resolution includes the findings necessary to support the approval of Tentative Tract Map (TTM 17626), Conditional Use Permit (CUP 13-08), the Architectural Control (AC 13-23), the Grading Plan Modification (GPM 13-03), and the Tree Removal Plan. The Planning Commission recommended the City Council approve Tentative Tract Map (TTM 17626), subject to the Conditions of Approval which are attached to the proposed City Council Resolution as Exhibit "B." The Planning Commission recommended the City Council approve Conditional Use Permit (CUP 13-08), the Architectural Control (AC 13-23), the Grading Plan Modification (GPM 13-03), and the Tree Removal Plan (as well as two of the three requested Administrative Modification to the HTC Form Based Code), each subject to the Conditions of Approval which are attached to the proposed City Council Resolution as Exhibit "C."

Pa e 11 of 17 Administrative Modifications. 1. Rear Yard Setbacks (Residences Only). The site plan for the residential units has been revised resulting in a change to the required administrative modification from the Form Based Code. Previously, the project required an administrative modification to allow a minimum 5'-0" rear yard setback and an average 8' -0" rear yard setback for residential structures along the project's perimeter whereas the Form Based Code requires a minimum 10'-0" rear yard setback. The revised plans establish a ten foot separation for the Villas along the park edge and as a result the minimum rear yard setback for the project is now 6'-0" with an average of 11 '6". The applicant indicates that the requested modification to the rear yard setback would provide greater ability to incorporate vertical and horizontal building mass articulation. The City has successfully used this approach with other projects and the resulting design would appear substantially consistent with the overall intent of the Form Based Code as well as the City's Design Guidelines. The Planning Commission recommended the City council approve the requested administrative modification to the rear yard setback for the prior design and the revised plan represents an increase in the overall rear yard areas for the residential units. 2. Third-Storv Mezzanines (Residences Only). Table 2A of the Form Based Code limits residential structures to a maximum height of two-stories and 35'-0". The Project requests an administrative modification to allow residential structures with a third-story mezzanine (but with a maximum height less than 35'-0"). The Applicant contends that the third story mezzanine will provide a loft office to accommodate work activities and provide additional useable floor area for the residences. The request would result in an increase in overall building massing and contribute to the overall intensity and character of the proposed Project. The Planning Commission discussed the design implications of the third story mezzanine area and the projected view impacts from the HTC Park. Given the 35 foot height standard in the HTC Form Based Code and the limited mezzanine area, the Planning Commission recommended the City Council approve the requested administrative modification to the height limit for residential structures. 3. Parking Standards. The Applicant requests a modification to the parking standards established by the Form Based Code to reduce the required hotel parking from 1.0 space per guest room to 0.8 spaces per guest room. The requested modification would reduce the parking required for the hotel from 136 to 108 spaces, a total reduction of 28 parking spaces. The City has previously granted nearly identical parking reductions to both the Plaza Banderas Hotel and the Marriott Hotel. Based on the shared parking analysis conducted by the City's traffic consultant, Linscott, Law & Greenspan Engineers (Attachment 5), that evaluated the mixed-use nature of the Project and the location of the Project site within

Pa e 12 of 17 the City's "park-once" area, the Project could provide sufficient parking to serve anticipated parking demand of the Project despite an overall reduction in parking from 245 to 223 spaces. The shared parking study determined that peak parking demand, not including potential special events that would attract large numbers of non-guests, would generate a maximum need for 216 parking spaces. This study was developed including assigning parking requirements to the ground level restaurant outdoor dining area and upper deck dining area as well as thirty three (33) rather than thirty (30) Villas (See Attachment 5.) Special events at the hotel could be effectively accommodated through the use of a Parking Management Plan (PMP) which has been included as a recommended condition of approval and the implementation of the HTC Park Once concept (Attachment 6). At the Planning Commission Public Hearings, there was extensive discussion of the parking study for the Project, the parking provided for the residential units, parking for special events at the hotel, existing Town Center parking supply and demand, and future parking options envisioned for the Town Center through the "park once" concept. etc. There was community sentiment expressed that the proposed Project could adversely impact the supply of on-street parking due to additional residential and special event parking demand. In response to these discussions, the Applicant has indicated they will enter into agreements for off-site parking to accommodate shuttle and valet services for special events. For the residential units, the Applicant is proposing to establish limits in the residential Covenants Conditions, & Restrictions (CC&R's) that would require the use of the garage areas for vehicle parking and limiting residents to a maximum of two vehicles parked on-site. The Planning Commission weighed the Applicant's request; the information provided in the parking analysis and the public testimony and recommended the City Council deny the administrative modification to the parking requirements for the hotel. Subsequent to the May 27, 2014, Planning Commission meeting, the Applicant has revised the pl9ns for the parking garage to provide turn-around areas at the termination of each drive aisle and was able to incorporate 6 additional parking spaces in the garage. This reduces the requested parking relief from 28 to 22 spaces. The most recent plans for the project have reduced the number of residential units by three thus reducing the required parking by six garage spaces. In recognition of the increased size of residential units that might be constructed with an allowance for single family detached residences in the Town Center, and the associated life style, staff has recommended additional guest parking for that would apply to the Villas. If adopted by the City Council, the guest parking standards for single family detached units would be 0.5 spaces per unit for units up to 2,500 square feet and 1.0 spaces per unit for units greater than 2,500 square feet. The requirement for on-site guest parking would be remaining consistent with other residential uses in Town Center at 0.25 spaces with the

Pa e 13 of 17 balance provided either on-site or through a shared parking agreement. Because the number of Villas has been reduced, the project will exceed the requirement for on-site guest parking and can address the balance through the required shared parking agreement. The required on-site guest parking for the thirty (30) Villas is provided in at three locations, two individual spaces and a bank of five spaces. The remaining spaces will be provided through the parking management plan. Historic Town Center Park Edge. The Project includes 10 residential townhouse-style units which would directly abut HTC Park. Because the HTC Park serves as an important community gathering place hosting various community events (i.e., concerts, plays, tree lighting ceremony, community events, expos, etc.), siting homes directly next to the Park would expose future residents to the noise, lighting and other impacts associated with such events. The City needs to consider the potential for future Project residents, who may be effected by the impacts of HTC Park events, to attempt to secure restrictions and/or prohibitions on community events. If that were to occur, the value of HTC Park to the community and its residents could be substantially diminished. Thus, the City should consider the potential adverse impact of the proposed Project on the future use of HTC Park as an important community event and gathering area. Real Estate Disclosures & Indemnification. The Applicant has proposed the use of real estate sales disclosures recorded with the County as well as incorporating indemnification language in the Residential CC&R's to the benefit of the City should litigation arise out of the continued use of the HTC Park for community events. The disclosure would inform prospective home buyers of the Park's nature as a community gathering and event area and disclose the fact that such events will result in noise, lighting, and similar nuisance impacts. While these approaches may offer some means of addressing this issue, they may be insufficient, in and of themselves. These provisions would be used in conjunction with building construction methods for the residences to assure noise impacts were minimized (Attachment 6). Park Edge Plan. As part of its review process, the Planning Commission Ad-Hoc Design Review Subcommittee addressed the edge between the Project and HTC Park. In recognition of concerns expressed regarding the relationship of the vertical elements of the new residences along the Park edge and the potential sense of territorial control of public park area by adjacent residents, the Ad-Hoc Subcommittee and Applicant developed a concept plan to add features intended to benefit Park operations and users of the park and establish a transition area between the Park and the residences (the "Park Edge Plan").

Pae14of17 The Parks, Recreation and Senior Services Commission (PRSSC) reviewed the Park Edge Plan. Similar to the Planning Commission's Ad-hoc Subcommittee, the PRSSC appointed a sub-committee to review the Park Edge Plan -the PRSSC Urban Village Working Group (the "Working Group"). The Working Group identified a number of concerns with the Park Edge Plan. The Working Group expressed concerns that the proposed fifteen (15) foot wide combined landscape buffer and DG pathway planned for installation on existing Park land would negatively impact the overall usability of the Park and unfairly impair parkland to create the buffer for the adjacent residences. An additional concern was that the four foot wide DG pathway appears to be too narrow to provide service access to the existing stage area and the DG surface is not suitable for use by delivery/service vehicles. The proposed wood siding for the restroom building raised long term maintenance concerns due to graffiti and vandalism. The Working Group determined that the existing finish was a better option (Attachment 9). In light of the Working Group's comments, the PRSSC forwarded its disapproval of the Park Edge Plan to the Planning Commission. In response to the concerns expressed regarding the proximity of the homes to the park edge and the reluctance to place physical improvements on the park property that could impact its use and operation, the applicant has modified the park edge plan. The new park edge plan establishes a ten (1 0) foot on-site buffer zone that will include a four and one half (4.5) foot planter along the park edge incorporating shrubs to create a clear delineation from the park, additional canopy trees, a four (4) foot walkway and an eighteen (18) inch planter adjacent to the residence to accommodate a vine that will provide additional visual relief as it grows to cover the vertical walls of the residences. The residences have been redesigned to include their front entrances taking access off the new walkway included in the buffer area (see enclosed plans). INTEGRATED PROJECT DEVLOPMENT: There is no direct fiscal impact associated with the recommended approval of the Project As discussed above, the hotel is considered the primary community benefit of the Project The hotel is the focal point of interest for many members of the community and represents a singular opportunity for revitalization of the Historic Town Center. With the submission of a request to subdivide the property into two primary components - 30 residential lots and a lot for the hotel- there has been ongoing discussion about the best instrument to provide assurance to the Community that the proposed Project would be completed as an integrated development The hotel is envisioned as an important new use for the downtown benefiting the community through establishment of a vibrant community gathering place, providing hospitality to visitors, increasing pedestrian activity, supporting adjacent businesses; while the residential component represents the first residences developed under the HTC Master Plan and HTC Form Based Code. The combined Project has the potential to deliver a major infusion of economic and social vitality in the Historic Town Center.

Pae15of17 One of the primary actions necessary for this Project to receive approval is legislative in nature - amending the HTC Master Plan. This action is necessary to permit consideration of the remaining actions, including and the Administrative Modifications and Land Use Code entitlements (i.e., the TTM, CUP, AC, GPM, and Tree Removal Plan). As a legislative act the amendment to the HTC Master Plan cannot be conditional. Once granted, it requires another act should the City Council wish to amend (or rescind) the approval. As such, it is imperative that the decision to grant the amendment to the HTC Master Plan results in the delivery of the integrated Project and, most specifically, the high quality, full service boutique hotel that is the cornerstone of the Project. As such, staff had originally worked with the Applicant on consideration of a Development Agreement as the instrument to assure the development of the hotel in conjunction with or before the development of the residences. Subsequent to the April 22, 2014, Planning Commission meeting, the Applicant notified staff that they were withdrawing the application for a Development Agreement and, instead, agreed to execute and record a covenant joining both parcels (i.e., the hotel parcel and the residential parcels) with language that linked the development of the hotel to the development of the residences. The specific details of the covenant are discussed on pages, four (4) and five (5) of this report regarding the hotel use. ENVIRONMENTAL IMPACT: The City previously prepared and certified a Program Environmental Impact Report for the HTC Master Plan (the "Program EIR"). The City retained Placeworks, an Orange County-based environmental consulting firm, to prepare an Initial Study (IS) for the Project pursuant to the provisions of the California Environmental Quality Act (CEQA) which incorporated, as appropriate, the analysis conducted as part of the Program EIR. Based on the Initial Study's analysis and findings, the City's Environmental Administrator determined that the Project impacts could be reduced to a level less than significant, and that the Project qualifies for a Mitigated Negative Declaration (MND). The Initial Study identifies the Project's potentially significant impacts and proposes mitigation measures to reduce those impacts to a less-than-significant level. The April 22, 2014, Planning Commission Agenda Report (Attachment 2) includes an extensive discussion of the CEQA analysis for the Project. Mitigation measures address cultural resources, noise, transportation, utilities and other areas of potential impact. The attached City Council Resolution includes the findings necessary to adopt the MND. The Planning Commission recommended the City Council adopt the MND, subject to the Mitigation Monitoring Program (MMP) which is attached to the proposed City Council Resolution as Exhibit "A." PRIOR CITY COUNCIL REVIEW: On March 11, 2014, the City Council and Planning Commission conducted a joint work session on the proposed Project and provided the Applicant with extensive review comments, observations, and direction.

Pa e 16 of 17 COMMISSION/COMMITIEE/BOARD REVIEW AND RECOMMENDATIONS: On February 24, 2014, the Parks, Recreation, and Senior Services Commission project was reviewed, to consider potential effects of the project on HTC Park. After extensive discussion, the Commission approved a motion forwarding the following recommendation to the Planning Commission for consideration: o The Project's proposed pedestrian access appears to be insufficient, in particular, with respect to proposed access between the project and Historic Town Center Park (i.e. address Americans with Disabilities Act (ADA) accessibility and provide sufficient width). o The proposed private access from the rear yards of the proposed residences bordering the HTC Park creates a security concern. o Parking for events being conducted simultaneously at the hotel and at HTC Park needs to be addressed to assure adequate parking for Park events remains available. On March 11, 2014, the Cultural Heritage Commission reviewed the proposed project, immediately prior to the City Council-Planning Commission joint worksession. At that time, the Cultural Heritage Commission, by a 3-2 vote, forwarded the project to the Planning Commission with a recommendation that potential impacts of the proposed hotel project on the Judge Egan House be addressed through the following design options: o Relocating or removing the proposed bell tower element from the hotel and extending the rooftop deck to the southwest corner of the hotel structure to reduce the overall building mass adjoining the Egan House. o Establishing a defined landscape edge along the Egan House property's northerly and easterly property lines adjoining the proposed hotel. o Revising the proposed color palette of the hotel to incorporate colors/shades that reduce the degree of visual contrast between the hotel and the Egan House. Because the Park Edge Plan was developed after the Parks, Recreation and Senior Services Commission had provided their initial comments on the Urban Village Project to the Planning Commission; they conducted a separate review of this plan at their May 19, 2014, meeting and voted to approve the following advisory position to the Planning Commission. The Parks, Recreation and Senior Services Commission forward its disapproval to the Planning Commission due to the close proximity and massing of the residential structures

Pae17of17 immediately adjacent to the park and direct linkage of the residential private space into the public park space. On April 22, 2014, the Planning Commission created an Ad-hoc Review Subcommittee comprised of Commissioners Roy Nunn and Tim Neely who met with staff, the project architect and the applicant to review the proposed project design and identify design revisions to assure compliance with the City's Architectural Design Guidelines. On May 27, 2014, the Planning Commission recommended the City Council approve the request for modification to the HTC Master Plan, approve the Tentative Tract Map (TTM), Conditional Use Permit (CUP), Architectural Control (AC), Grading Plan Modification (GPM), Tree Removal Plan and the HTC Form Based Code Administrative Modifications for allowance of third story mezzanines and reduced rear yard setbacks for the residential units. The Planning Commission recommended the City Council deny the requested HTC Form Based Code Administrative Modification for a reduction in the amount of required parking for the hotel. NOTIFICATION: Pursuant to Title 9, Land Use Code, Section 9-2.302(f), Notification Procedures and City Council Policy 10-08-17-03 (Public Notification Policy), a public meeting notice has been mailed city-wide, including adjoining property owners (as listed on the Orange County Real Property Tax Assessment rolls) and posted at three public locations and the property was posted with the required project notification sign.. This agenda item has been provided to the applicant and their representative through posting of the agenda packet on the City's website. A TT ACHMENT(S): Attachment 1 - Attachment 2 - Attachment 3 - Attachment 4 - Attachment 5 - Attachment 6 - Attachment 7 - Attachment 8 - Attachment 9 - Draft Resolution and Conditions of Approval April 22, 2014, Planning Commission Report May 27, 2014, Planning Commission Report Draft Declaration Establishing Covenants Affecting Real Property Shared Parking Analysis, Linscott, Law & Greenspan Engineers Draft Hotel Parking Management Plan Draft Special Provision for Notice to Owners of Park in Vicinity May 19, 2014, PR& SSC Report Public Comments ENCLOSURE(S): -Large-scale project plans, 11 x 17